Make the most of now

To steal a line from the well-known telco ad, now is good for having a close look at reviewing commercial leases across New Zealand. There are a number of reasons why now is good.

Firstly, I think it’s time we moved on from a wait and see attitude about the markets and international economic conditions.

Secondly, there are very few new leases being drawn up at the moment. Many new building projects are on hold, and the majority of Parallel Direction’s work with tenants right now is getting better outcomes on renewals and rent reviews.

Thirdly, and I’ve mentioned this a few times, evidence continues to grow that it is very much a tenant’s market. Commercial property values are predicted to keep heading down well into 2010, and research is showing vacancy rates heading up to 18 percent or more.

In pre-recession times the best timeframe for considering your future property needs is around 18 months before your next lease renewal or lease expiry.

But, with all of us working under a new set of business rules, we need to keep up with those savvy organisations that are already considering property to be part of their whole business strategy to deal with current market conditions.

Now is a good time to be thinking about property, not just making sure your space fits your business needs, but reviewing closely associated items such as IT, any fit-out and design changes, as well as the clauses of your lease.

It continues to be my experience that many businesses are still not aware of the opportunities available to them at their rent review and lease renewal dates. Frequently, clients are caught short and have to scramble to adjust at the last minute.

This often leads to a soft rent review or lease renewal which doesn’t necessarily give the best possible outcome for the tenant. In a tenants market, this is a real waste of a great opportunity.

I urge all commercial tenants not to wait until the last minute but to integrate these critical dates into their business planning and projections.

Most businesses will be thinking out several months for a range of other strategies. It makes good sense to weave property into this planning process as well. If you don’t have the property expertise in-house, independent advice can be invaluable and very cost effective.

Make the most of now.

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